New labour laws in India to bring workplace transformation

New labour codes will potentially transform work culture, affecting working hours, salaries, leave and flexible work arrangements.
By: | July 1, 2022

The Central Government had notified four labour codes – the Code on Wages, Industrial Relations Code, Social Security Code and the Occupational Safety, Health and Working Conditions Code – in September 2020. They are set to replace 29 labour laws, which have remained unchanged since Independence.

However, states are required to notify rules under the four codes to enforce these laws in their respective jurisdictions. Only 23 states and Union Territories have published the draft rules under the Code on Wages. The codes will be fully implemented when all states are on board.

The proposed new labour codes, expected to be implemented from July 1, will give companies the flexibility of implementing a four-day workweek. Under a four-day workweek, employees will be required to meet the 48-hour work hours, meaning that instead of working eight hours every day, they are expected to put in 12 hours.

Under the new codes, the take-home salary is expected to go down, as the Provident Fund (PF) contributions of the employee and the employer will increase. The PF contribution is required to be a proportion of 50% of gross pay.

Existing laws require a new employee to work 240 days to be eligible to take leave. The new labour codes will reduce this number to 180 days. However, the quantum of leave earned remains unchanged – for every 20 days of work, one day of leave is earned. The number of leaves which can be carried forward will continue to be 30.

READ: More workers in India joining gig economy

Also, under the new rules, companies are required to have basic principles in place regarding work-from-home (WFH) to ensure that the work-life balance is not affected, according to Firstpost.